I'm always paying, never make it, but you can't look back

[venta]

So, sums. I can, broadly speaking, do sums. I have a degree in maths.

However, interest rate calculations have always baffled me. Sure, if you ask me to calculate 3 months compound interest at a monthly rate of x% I know what to do. However, when it comes to real examples of mortgages and credit cards, I can't work out what the sum I need to do is. I'm still slightly baffled about the interest charged me when I was a day late paying my credit card off in full in March.

Today, the BBC carried a story about a loanshark. It includes the following statement about someone who borrowed £1000:

"...to pay £49 a week over 60 weeks, making the total amount he had to
repay £2,940 at 917% APR."

Now, if we approximate 60 weeks to a year, then surely that's an annual interest rate of no more than 294%. The quoted APR isn't even in vaguely the right ballpark.

So... have I completely failed to understand APR ? (Wikipedia's page on the subject didn't really help with the definition.) Or is the BBC publishing unmitigated wank in the name of investigative journalism ?

Edit It turns out I'd failed to understand APR, and the BBC is cleared in this instance.

Comments

[bateleur.livejournal.com]

Amendment: having seen ewx's answer I expect that explains the discrepancy. I'm not sure quite how one ought to do the sums in the case of fixed payments with the loan considered repaid at the end, since the consumer credit act allows you to repay in full at any time. How much would be repayable in such circumstances is not obvious (if it was the full £2940 only one month into the loan that would give an APR of over 2259754091681536350275064%).

[onebyone.livejournal.com]

I'd say that:

1) Someone described by the BBC as a "loan shark" is implicitly being accused of not strictly respecting the Consumer Credit Act.

2) Since regulated loans are required to advertise an APR, my guess for how to calculate the amount due for early repayment is based on the quoted APR, maybe with allowances for interest to be calculated on a period convenient for the lender rather than to the day repaid.